The Alliance for Public Technology submits these brief reply comments to reiterate its recommendation that the Commission adopt an alternative basis for encouraging both incumbent local exchange carriers (ILECs) and competitive local exchange carriers (CLECs) to deploy advanced telecommunications capability to all Americans. While commending the Commission's policy goal of promoting deployment by all providers based on market risk and reward, APT's initial comments in this proceeding detailed its arguments for a different rationale for the Commission's proposed actions and emphasized the need for proactive Commission policies to ensure the ubiquity goals of Section 7061. The comments also endorsed the Commission's efforts to ensure competitors local loop access and effective co-location2. Therefore, these reply comments will summarize the recommendations and point out that the record supports the necessity for flexible use of separate subsidiaries.

To ensure "that an optional alternative pathway is available for incumbent LECs that are willing to offer advanced services on the same footing as any other of their competitors," the Commission proposes allowing ILECs to establish an unregulated structurally separate subsidiary for advanced telecommunications services. Otherwise, ILECs must unbundle and resell such services to competitors at a wholesale discount as required by Section 251(c) of the Telecommunications Act of 1996."3

APT believes, however, that competition in the advanced data services market destines advanced services affiliates and others to market to business customers and affluent residential consumers to the detriment of less lucrative markets. Therefore, APT urges the Commission to monitor carefully whether separate subsidiaries undertake the widespread advanced infrastructure deployment that Section 706 contemplates and to implement the affirmative measures APT suggests to stimulate infrastructure investment in underserved areas. If the Commission determines that broadband deployment to low income, rural, high cost or other less attractive markets is occurring too slowly, if at all, then APT advocates that it eliminate ILECs' use of advanced services affiliates and permit them to integrate their advanced services with other telecommunications offerings.

While affording ILECs an "optional alternative pathway," APT contends that the Commission's approach unnecessarily forecloses its own options for removing regulatory barriers to infrastructure investment under Section 706. By establishing the separate subsidiary as the sole means of obviating the investment-deterring effects of Section 251(c)'s unbundling and resale obligations, the Commission has no flexibility to address circumstances as the public interest may necessitate. Therefore, APT strongly recommends that the Commission limit the UNE platform to existing ILEC networks and decline to require incumbents to resell at wholesale rates access to their developing advanced capabilities.

Commenters representing small and rural ILECs expressed grave concern that the expense and burden of establishing separate advanced services affiliates would prevent their deployment of broadband networks in the high cost areas they serve4. In these circumstances, the Commission should carefully weigh the impact of its subsidiary proposal on small and rural carriers, and consider whether it will promote or prohibit broadband deployment in areas unlikely to attract competing carriers. These commenters emphasize that the proposal offers no viable choice for them and will surely curtail development of networks that could provide extraordinary benefits for their customers. Their fears confirm the propriety of the flexible approach APT recommends to allow such companies to provide advanced data services on an integrated basis without unbundling and resale obligations.

As advanced telecommunications networks begin developing throughout the country, the Commission must have the necessary ability to adapt its policies to the realities of these evolving markets. Section 706 promotes competition not for its own sake but to facilitate deployment of nationwide broadband networks that will afford everyone in the country access to the technologies that can improve their quality of life. Therefore, APT respectfully urges the Commission to adopt APT's proposed recommendations.

Respectfully submitted,

Maureen A. Lewis
General Counsel
Alliance for Public Technology
901 15th Street, N.W., Suite 230
Washington, DC 20038
(202)408-1403

October 16, 1998

End Notes

1 NPRM Comments of the Alliance for Public Technology, In the Matters of Deployment of Wireline Services Offering Advanced Telecommunications Capability et al., CC Docket No. 98-147 (September 25, 1998) (NPRM Comments).

2 Id. at 4-5. The comments noted the difficulty of refining the details of such proposals. APT is encouraged, however, by the principles developed by NorthPoint Communications, Inc., a facilities-based CLEC, and Ameritech to facilitate local loop access and co-location if the latter establishes a separate data services affiliate. See Comments of Ameritech, In the Matters of Deployment of Wireline Services Offering Advanced Telecommunications Capability, CC Docket No. 98-147 (September 25, 1998) at Attachment 2.

3 Memorandum Opinion and Order, and Notice of Proposed Rulemaking, In the Matters of Deployment of Wireline Services Offering Advanced Telecommunications Capability et al., FCC98-188 (released August 7, 1998) (NPRMP at para. 86.

4 See e.g., Comments on the Initial Regulatory Flexibility Analysis, Notice of Proposed Rulemaking, and Request for Clarification of the Memorandum Opinion and Order of the Office of Advocacy, United States Small Business Administration, (September 25, 1998); NPRM Comments of Moultrie Independent Telephone Company, (September 25, 1998); Joint NPRM Comments of the Organization for the Promotion and Advancement of Small Telecommunications Companies and the National Rural Telecommunications Cooperative (September 25, 1998); NPRM Comments of the National Telephone Cooperative Association (September 25, 1998) and NPRM Comments of the Rural Telecommunications Group (September 25, 1998).